Irrelevant Inflation

While the CPI rose by 1.3% Y-o-Y and core CPI, which strips out volatile food and energy, is up 1.7% Y-o-Y, their highest levels since Sars-Cov-2 arrived, inflation will not be a concern for years. Inventory shortages, which have been a meaningful contributor will soon dissipate, and high unemployment, weak demand, and excess industrial capacity will remain for some time. Moreover, the Fed’s favorite measure PCE inflation is even lower.